UK's Cairn Energy and Devas Multimedia Ltd have filed lawsuits in the US to seize overseas assets of Air India to recover dues from the Indian government, minister of state for civil aviation Gen (retd) VK Singh informed the Lok Sabha.
In a written reply, the minister says, "Cairn Energy and Devas Multimedia have filed lawsuits in the US district court for southern district of New York seeking declaratory and money judgement against Air India as an alter ego of the Republic of India."
However, since Air India is a corporate entity with its own management and board and is defending its interest in this case by appointing lawyers, the minister says.
Further, the lawsuits filed by Cairn and Devas multimedia will not have any impact on the divestment process of Air India, Gen Singh added.
In December 2020, an international arbitration tribunal ruled that India's tax claim of Rs10,247 crore in past taxes over internal reorganisation of Cairn's India business was not a valid demand and had awarded damages of $1.2 billion along with interest and costs to the UK energy company.
In 2010-11, Cairn Energy had sold Cairn India to Vedanta. Post the merger of Cairn India and Vedanta in April 2017, the UK company's shareholding in Cairn India was replaced by a shareholding of about 5% in Vedanta issued together with preference shares.
Along with attaching its shares in Vedanta, the income tax (I-T) department from India seized dividends of around Rs1,140 crore due to it from the shareholdings and set off a Rs1,590-crore tax refund against the demand.
In 2015, Cairn initiated an international arbitration to challenge retrospective taxation.
Devas Multimedia is also seeking over $1.2 billion from India it won in an international arbitration in September 2017. In 2020, an arbitration tribunal had awarded more than $111 million along with interest to Devas. The company also won $562.5 million in damages from separate proceedings at the International Chamber of Commerce.
This dispute goes back to 2011, when Antrix Corp, a unit of Indian Space Research Organization (ISRO) annulled an agreement with Devas Multimedia citing force majeure (unforeseeable circumstances that prevent someone from fulfilling a contract).
The then United Progressive Alliance (UPA) government cancelled the controversial Devas-Antrix contract in February 2011, invoking sovereignty and decided to use the advanced satellite (GSAT-6) for the country's strategic use.
Under the annulled deal, Antrix was to lease transponders of the satellite to Devas for allowing it to offer digital multimedia services using the S-band wavelength (spectrum), reserved for strategic purpose.
After the cancellation of the deal, Deutsche Telekom, three Mauritius-based foreign investors in Devas Multimedia, and Devas Multimedia itself approached various international arbitration tribunals seeking damages from the Indian government.
Antrix Corp has also initiated proceedings to liquidate Devas Multimedia alleging that the company was a sham entity. The matter is currently pending before the Karnataka High Court.
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